S&P 500 Technical Update: Key Levels

On November 16 most major indices put in hammer reversals, marking a short term technical bottom in the equity markets. Now, not all technical reversals are created equal, but all reversals need to be respected. On that day, the S&P 500 dipped down to the 61.8% Fibonacci retracement level before reversing and rallying into a positive close. This came amidst an increasingly negative environment… a contrarian “tell” that set up the current market rally.

So what technical levels should investors be watching on the S&P 500? Well, looking at the construct of the current rally, it is clear that some rest would be healthy after a five percent rally. 1420-1430 is a pivot congestion zone that should put up formidable resistance. More precisely, the 50 day moving average and 61.8% Fibonacci [up] retracement level reside at 1426, so keep an eye on the price action in and around this level. This would be an ideal spot for a rest.

A sustained move through this level would be bullish, while a move back below the 200 day moving average would return caution.